NPS Rules: Investing in the National Pension System (NPS) will be easier and safer than before from July 15, 2022. By issuing a circular on behalf of the Pension Fund Regulatory and Development Authority (PFRDA), rules were made to inform investors about the risk profile in NPS. Its purpose was to increase awareness among investors.
Must share risk profile
You (investors) have to be told that they can decide on their own investment and get maximum returns from them. Now the pension fund will have to share the risk profiles of all the schemes on the website within 15 days on a quarterly basis. PFRDA has made rules to inform investors about the risk profile.
6 levels of risk created
Under these rules, 6 levels of risk have been created Low, Low to Moderate, Moderate, Moderately High, High and Very High level. This risk profile will be analyzed on a quarterly basis. Pension funds with Tier-1 and Tier-2, Asset Class Equity (E), Corporate Debt (C), Government Securities (G) and Scheme A are required to disclose the risk profile of the schemes.
lowest credit quality
In the PFRDA circular, it was said that a credit risk value of 0 to 12 will be given on the basis of the Conservative Credit Rating of the instrument. A credit value of 0 indicates high credit quality, while a credit value of 12 indicates the lowest credit quality.
Investigate risk profiling like this
Information about the risk profile will be given on the website of the pension fund concerned under the Portfolio Disclosure section within the last 15 days of every quarter. Once in a year on 31st March, the risk level of the schemes and the number of times the risk level has been changed in a year will be published on the website of the pension fund.